DBA formed its second consecutive VRCB last week, a pattern that occurs less than two percent of the time. Although the previous week’s VRCB was largely because of reduced trading volume, last week formed because of an equalization of buyers and sellers. Finding support early in the week, DBA fell back down to close out in the bottom quartile of the trading range. Price action was bearish confirmed, indicating trading should start lower this week. We have issued a BUY at 28.96 with the anticipation of trading 28.64 early this week; if DBA rallies up to 28.96, a weekly OVB will form generating an optimal buy signal.

Commodity grain futures have seen a significant reduction in trading volume, down more than 50% in the last three weeks. The below trading volume paired with reduced volatility has formed three consecutive VRCBs, an exceptionally rare technical pattern. This normally indicates a change of directional movement and often forms at the top of rallies and bottom of corrections. We believe the grains have found a moderate to strong support level that will keep prices above 55. We currently have a Working Order to BUY 50,000 shares of JJG at 58.59, risking $96,500 or 0.19% of our core position. This order entry is a very low risk trade with historically high probabilities of success.

After achieving 100% of our initial downside price target, gold rallied up $6 last week on the news of President Obama’s reelection. While equity markets tumbled, safe havens such as gold found strong support from investors. Price action was bullish and confirmed by Friday’s close above the midrange, above the previous close and above the open. After four weeks of steady sell-off, GLD finally managed to violate and close above the previous week’s high. Price action dictates that trading will be higher this week with a continuation of people moving into hard assets.

About the Author

Parrish Hicks Capital Research is a trading and technical analysis firm that specializes in Energy and Metal commodity futures. The two founders, Jim Parrish and Kris Hicks, have a combined 38 years’ experience in the commodity business and in 2011 accurately forecasted both $25 moves to the downside in May and July and the $25+ move to the upside in October. They also called the all-time high day for Gold on September 6, 2011 and forecasted a projected downside target of 1528.10 in March 2012. Their trading methodology has a high degree of accuracy which confirms tops/bottoms, projected trading ranges and projected targets for those ranges. Their expertise is focused on 16 commodities plus the comparable ETF markets. You can reach them at Jim@ParrishHicks.com and Kris@ParrishHicks.com or at www.ParrishHicks.com.

IMPORTANT DISCLOSURE

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